Traditionally, small business owners have lacked the time or the bandwidth to compare financing and credit options to determine which lending products best suit their needs. In addition, information about lenders and their credit products is typically not consolidated at one web site, in one book, or at another central location for ready access and review by the prospective borrower. Often the only solution available to small business owners is to talk to retail bankers at the branch level who may not be well versed with the needs of small businesses and the relevant aspects of the industries in which they do business. In addition, such branch bankers may not be able or willing to advise small business owners on suitable products available from other banks. This disconnect often hampers the ability of small business owners to obtain access to credit products at competitive rates.
Another issue arises when small business owners do not qualify for credit products. Lending institutions may identify an owner as a credit risk and there may be no way for the owner to become more creditworthy. Also, for lenders it can be difficult to reach out to small business owners in a targeted way without investing substantial marketing dollars. For example, a bank may spend a significant percentage of the loan amount for a single transaction just in the form of marketing costs.
It can be seen that problems faced by small business owners may include lack of financial education, mistrust of financial institutions, lack of available information about credit products at a single point of access, and lack of document management systems to help collect and transmit required loan documents. On the other side of the transaction, issues experienced by lenders may include high marketing costs, lack of availability of a platform that consolidates products from other lenders for comparison, lack of tools for matching businesses to credit needs based on underwriting criteria, and lack of business analysis tools for monitoring the creditworthiness of their small business clients.
What are needed, therefore, are enhanced tools for analyzing the financial condition of small business borrowers and for matching appropriate credit products or credit arrangements between small business owners and lenders such as banking institutions, alternative lenders, and private money lenders.